UK house prices reached a new record in January, increasing by 0.7% to an average of £299,138, as buyers rushed to complete deals before a stamp duty increase in the spring, according to Halifax. Economists and analysts predict that house prices will continue to rise in 2025 due to limited supply and stable demand. Falling mortgage rates are expected to boost sales, with potential for further interest rate cuts by the Bank of England.
Despite the record-high prices, annual growth slowed slightly to 3%, down from 3.4% in December. The market momentum is perceived to be slowing compared to the previous year. The head of mortgages at Halifax, Amanda Bryden, noted that while affordability remains a challenge for many buyers, the market shows resilience. The end of the stamp duty holiday announced by chancellor Rachel Reeves in October is expected to impact first-time buyers, with the threshold for reduced rates and zero-tax stamp duty decreasing in April.
Changes to stamp duty often lead to a rush in buying activity before the deadline, followed by a lull in the market. The broader economic conditions, including the Bank of England’s reduced GDP growth forecast and global trade uncertainties, may also affect the housing market in the coming months. Despite geopolitical uncertainties, Bryden remains positive about key indicators such as the bank’s interest rate cuts and expected growth in household earnings.
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